It has been a very unusual and unprecedented year for the World. The outbreak of theCOVID-19 pandemic has caught the entire global population completely unprepared. Economieshave been disrupted and the very way of living life and running of businesses is going tobe very different from what we have been used to.
Naturally India has not been left unscathed. The Indian GDP is forecasted to contractsignificantly for the current financial year that is 2020-21. Widespread dislocation andunemployment will lead to distress and I fear also likely to impact law and order in asmuch as poverty and the absence of means to a living might drive desperation.
In this environment I would have liked to see the Government taking risks beyond itsusual concern for fiscal discipline and credit rating and take emboldened steps to makeadequate direct transfers of cash to the needy. In fact making possible the mechanismsfor such transfers to happen seamlessly are one of the major successes of this Government.Such a step would have addressed the concerns for immediate demand stimulation instead ofwhich the Government chose to address policy reforms which though necessary in the longrun are not in my opinion the antidote for the economy at this time. The response of manycountries to the economic fallout of the pandemic has been much more realistic and bold.
Notwithstanding the Government's tentative response to the economy the early lockdownpostponed the proliferation of the pandemic in India giving the State Governments theopportunity to scale up healthcare to combat the increase in positive cases of COVID-19.The result is that mortality rate in the country has been contained. There is much hopethat antidotes to the virus and the availability of a prophylactic vaccine will soon beavailable. Even so the sheer magnitude of demand and the constraints on capacity toproduce will mean that it shall be quite a while before the global population getsinsulated from the dangers of contracting this disease.
As a Company capital investment not only in the Alco chemical business in India butalso in its overseas subsidiaries are proving to be inopportune as we are today suddenlyfaced with major disruptions in demand and inadequate capacity utilization. Uncertainty isthe only certainty today and as we battle with the impact of this pandemic I can at leastsay that as I write this statement green shoots are visible.
Clear focus on value addition product development and cost-efficient production arehelping the Alco chemical business of the Company in tiding over the present crisis. Allthe plants at Ankleshwar Vizag and Naidupet (commissioned in October 2019) are consciousof maintaining the highest levels of efficiency with a keen eye on cost optimization.
The automotive industry has been undergoing structural changes which have impacted theelectronic components manufacturing activities of APAG Holding AG the Company'ssubsidiary in Switzerland that conducts its business through APAGCoSyst Electronic ControlSystems. Despite the pandemic there are signs of recovery and strategic initiatives toreorient the business together with major steps on cost reduction are proving to be verysuccessful.
The denim business of the Company through its subsidiary Kanoria Africa Textiles Plc.is also now stabilized and reached a point where financial drain has been arrested.Bottlenecks in production have been corrected with balancing equipment and the foray intogarmenting is significantly contributing to both the top line and bottom line.
After a year of sub-optimal profitability we are now faced with a year of totalunpredictability. Our endeavor to maintain the highest levels of efficiency costoptimization product development strategic reorientation and adherence to values shouldhold us in good stead and face these unprecedented challenges. I am cautiously optimistic.
Chairman & Managing Director.